The funding rates have started to skyrocket again these days, and a bunch of people in the group are asking whether to directly take the other side of the trade. To be honest, I’m now more cautious: extreme rates don’t mean an immediate reversal, they just indicate that a group of people are crowded on one side, and who gets liquidated first is just a matter of luck… I used to like to fight hard, but I often learned my lesson from the volatility.

My usual approach is: either take a small position to earn that tiny fee rate, but set a good stop-loss and don’t get greedy; or simply stay away, and wait until the rate goes from “crazy” back to “normal.” Recently, some people have been talking about rate cut expectations, the US dollar index moving up and down with risk assets, and so on. Honestly, I react pretty slowly, and after listening, I didn’t feel it could directly guide my next trade… Anyway, it’s more reliable to focus on avoiding getting squeezed or slipped than trying to guess macro trends.